Wednesday, July 2, 2014

Joe Garza of Dallas Talks Tax Shelters and Tax Plans

While the term "tax planning" is frequently utilized to describe the process, it's not necessarily thoroughly understood. Below is what tax planning really indicates. Remember, these methodologies aren’t just tax shelters, they’re legitimate planning and preparation methods to secure wealth.

Tax planning is the art of organizing your undertakings in ways that defer or avoid taxes. By putting to use beneficial tax planning systems, you can have more money to save and invest or more money to spend. Or both.Your choice.

Put differently, tax planning means deferring and flat out avoiding taxes by taking advantage of favorable tax-law stipulations, boosting and expediting tax deductions and tax credits, and generally making maximum use of all applicable breaks obtainable under our beloved Internal Revenue Code.

While the federal income tax regulations are now more complicated than ever, the advantages of good tax planning are arguably more important than ever before.

Of course, you should not change your fiscal practices only to avoid taxes. Genuinely effective tax planning solutions are those that enable you to do what you want while lowering tax bills along the way.

How are tax and financial planning related?

Financial planning is the art of enforcing approaches that help you reach your financial requirements, be they short-term or long-term. That sounds pretty very easy. Still, if the actual accomplishment was simple, there would be a lot more rich folks.

Tax and financial planning are closely related, considering that taxes are such a major expenditure item as you go through life. If you become really wealthy, taxes will most likely be your single most significant expense over the long haul. So preparing to reduce taxes is a critically important piece of the overall budgetary preparation process.

A Final Word

There are myriad other ways to commit costly tax mistakes. Such as selling appreciated securities too soon when holding on for just a bit longer could have led to lower-taxed long-term capital gains instead of higher-tax short-term gains; taking retirement account withdrawals prior to age 59 1/2 and getting stuck with the 10 % premature withdrawal tax; or failing to arrange for payments to an ex-spouse so that it can qualify as deductible alimony; the list continues.

The cure is to prepare for transactions with taxes in mind as well as avoid making careless changes. Looking for highly qualified tax guidance before pulling the trigger on major transactions is in most cases money well spent. As we get closer to the end of the year, a number of columns will involve tax planning tips that many people can benefit from.

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